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Walsh-Healey Act of 1936

The Walsh-Healey Public Contracts Act (PCA) applies to contractors with contracts in excess of $10,000 for the manufacturing or furnishing of materials, supplies, articles, or equipment to the U.S. government or the District of Columbia. The Act covers employees who produce, assemble, handle, or ship goods under these contracts.

The Act does not apply to executive, administrative, and professional employees, or to outside salespersons exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act. Nor does it apply to certain office and custodial workers.

Certain contracts are not covered by this Act. They include:

Purchases of materials, supplies, articles, or equipment as may usually be bought in the "open market";

Purchases of perishables;

Purchases of agricultural products from the original producers;

Contracts made by the Secretary of Agriculture for the purchase of agricultural commodities or products;

Contracts for public utility services and certain transportation and communication services; and

Supplies manufactured or furnished outside the U.S. (including Puerto Rico) or the Virgin Islands; and

Contracts administratively exempted by the Secretary of Labor in special circumstances because of the public interest or to avoid serious impairment of government business.

Basic Provisions/Requirements

Covered contractors must pay employees on the contracts the federal minimum wage of $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24, 2009. The employers may pay special lower rates to apprentices, students in vocational education programs, and disabled workers if they obtain special certificates from the Department of Labor. Employees must also be paid one and one-half times their regular rate of pay for all hours worked over 40 in a workweek.

The Act prohibits the employment of youths less than 16 years of age and convicts, except under certain conditions. Not included in convict labor are persons paroled, pardoned, or discharged from prison, or prisoners participating in a work-release program.

Employee Rights

The PCA provides employees on covered federal contracts the right to be paid at least the minimum wage for all hours worked and time and one half their regular rate of pay for overtime hours. The Wage and Hour Division of the Department of Labor’s Employment Standards Administration accepts complaints of alleged PCA violations.

Penalties/Sanctions

Contractors and subcontractors who violate the Act may be subject to a variety of penalties. The underpayment of wages and overtime pay may result in the withholding of contract payments in amounts sufficient to reimburse the underpayment. The penalty for employing underage minors or convicts is $10 per day per person, for which contract payments may also be withheld. The Department may also bring legal action to collect wage underpayment and fines for illegally employing minors and convicts. Willful violations may subject the employer to cancellation of the current contract and debarment from future federal contracts for a three-year period.

After an investigator has served a formal complaint to the contractor, a hearing is held before an Administrative Law Judge. If the respondent has violated the Act, he or she can appeal the decision by filing a petition for review with the Administrative Review Board. Final determinations on violations and debarment may be appealed to and are enforceable through the federal courts.

Relation to State, Local, and Other Federal Laws

State and local laws regulating wages and hours of work may also apply to employment subject to this Act. When this happens, the employer must observe the law setting the stricter standard. Compliance with the regulation's safety and health standards will not relieve anyone of any obligation to comply with stricter standards from another source.

The Walsh-Healey Public Contracts Act and the Fair Labor Standards Act may apply simultaneously to the same employer.